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CNN Saturday Morning News

Pocketbook Protector

Aired October 05, 2002 - 08:54   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MILES O'BRIEN, CNN ANCHOR: The holiday season just around the corner. I know you're happy to hear that. You might find yourself saying charge it. You might say charge it a little more often than you should. And this week our "Pocketbook Protector," not pocket protector, although he might wear one -- we'll have to ask him next time we see him -- Clark Howard tells us how to pay down that credit card debt in double time.
(BEGIN VIDEO CLIP)

CLARK HOWARD, CONSUMER ADVOCATE: I have a question here from Robert in Indiana. And Robert's scoop is he has $18,000 in credit card debt that's at 9.9 percent interest. And the minimum payment is $167 a month. And he wants to know if he steps that up, will he ever be out of debt? For example, if I paid $500 per month, how soon would I be done with $18,000 in credit card debt?

Well, just the principal loan would take you three years to pay, plus the carry on the interest. But fortunately since your interest rate is low enough, it's not going to take you forever. However, how about this? Do you know that there's a wonderful way to pay credit cards that most people aren't aware of. The interest on a credit card is figured daily. So that means every day until the credit card company gets your money you're paying interest on the debt. What if, instead of sending your $500 you're talking about sending once a month, you send them $250 every 14 days?

Paying half of what you expect to pay, but paying it every 14 days, will get you out of debt so much faster, it'll make your head spin. And this method wasn't developed by me. It was developed by a guy who was a former banker called the Eisenson Method (ph) is what I refer to it as. So simply all you do -- and if you were just a minimum payer, the same thing would work -- you pay half of your monthly minimum or whatever your goal is to pay each month, you pay half of it every 14 days. Over the course of a year, you will have made 26 half payments, or the equivalent of 31 monthly payments.

And then you know what happens? Your credit card company, as your balance starts dropping, they're going to lower what they want you to pay. Don't fall for it. Keep paying that same amount every 14 days. And you know what happens? Comparing that to paying the minimum every month, do you know you'll be out of debt in one fourth the time you would be otherwise? And if you want to see how to do this method, check it out at clarkhoward.com. I've got a link for you that walks you through paying half your credit card payment every 14 days. It's magic. (END VIDEO CLIP)

O'BRIEN: That Clark Howard, gosh, you know, that was a great tip. I wonder if you pay once a week or even like send a check every day if that would be better? We'll have to ask him that when we see him next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired October 5, 2002 - 08:54   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: The holiday season just around the corner. I know you're happy to hear that. You might find yourself saying charge it. You might say charge it a little more often than you should. And this week our "Pocketbook Protector," not pocket protector, although he might wear one -- we'll have to ask him next time we see him -- Clark Howard tells us how to pay down that credit card debt in double time.
(BEGIN VIDEO CLIP)

CLARK HOWARD, CONSUMER ADVOCATE: I have a question here from Robert in Indiana. And Robert's scoop is he has $18,000 in credit card debt that's at 9.9 percent interest. And the minimum payment is $167 a month. And he wants to know if he steps that up, will he ever be out of debt? For example, if I paid $500 per month, how soon would I be done with $18,000 in credit card debt?

Well, just the principal loan would take you three years to pay, plus the carry on the interest. But fortunately since your interest rate is low enough, it's not going to take you forever. However, how about this? Do you know that there's a wonderful way to pay credit cards that most people aren't aware of. The interest on a credit card is figured daily. So that means every day until the credit card company gets your money you're paying interest on the debt. What if, instead of sending your $500 you're talking about sending once a month, you send them $250 every 14 days?

Paying half of what you expect to pay, but paying it every 14 days, will get you out of debt so much faster, it'll make your head spin. And this method wasn't developed by me. It was developed by a guy who was a former banker called the Eisenson Method (ph) is what I refer to it as. So simply all you do -- and if you were just a minimum payer, the same thing would work -- you pay half of your monthly minimum or whatever your goal is to pay each month, you pay half of it every 14 days. Over the course of a year, you will have made 26 half payments, or the equivalent of 31 monthly payments.

And then you know what happens? Your credit card company, as your balance starts dropping, they're going to lower what they want you to pay. Don't fall for it. Keep paying that same amount every 14 days. And you know what happens? Comparing that to paying the minimum every month, do you know you'll be out of debt in one fourth the time you would be otherwise? And if you want to see how to do this method, check it out at clarkhoward.com. I've got a link for you that walks you through paying half your credit card payment every 14 days. It's magic. (END VIDEO CLIP)

O'BRIEN: That Clark Howard, gosh, you know, that was a great tip. I wonder if you pay once a week or even like send a check every day if that would be better? We'll have to ask him that when we see him next.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com